Tuesday, September 13, 2011

The China Syndrome

Is anyone noticing how much debt the Chinese are racking up? I don't mean the people of China or the Chinese government going into hock--but rather the amount of money that other countries around the globe are borrowing from China. Their latest "investment" is going to be in Italy--which needs to come up with billions of dollars to head off the same debt crisis that threatens to engulf nearly all of the European economies.

The fact that China is entering into the Euro disaster zone must mean that Germany is tapped out in trying to help keep its neighbors afloat. I know the German bailout of several other countries had to be approved by the nation's Supreme Court--as the conservative political minority was fed up with being the Continental ATM Machine. And how could you blame them for having that attitude? You don't see Germans taking the entire month of August off of work like Spain and Italy. German seniors don't get full retirement benefits at 55 like in Greece and there is no acceptance of permanent unemployment for the younger generations like in Britain. The term "German work ethic" didn't come about by accident--it was earned.

Anyway, a Chinese bailout of a European country is another sign of the decline of the US economic power in the world. The US has always been Western Europe's security blanket, first with the Marshall Plan after World War Two and then by picking up the lion's share of operation expenses for NATO. But now, the countries that we helped to free from facism and whom we protected from Communism for decades are turning to the very Socialists they once feared for help.

Maybe the Chinese will be benevolent creditors. I know the Keynsian economists defending our own major borrowing insist that it is in China's best interest to see all of the countries that owe it money do well--since that is how they will get their money back. But for some reason, I have my suspicions about a regime that still holds political prisoners--and has turned tanks on its own people more than once.

My brother-in-law does a lot of business in China--and he strongly believes they will be the economic leaders of the 21st century. Already, Chinese companies are farming out their work to countries like India and Vietnam--where the labor pool is even cheaper than in their own country--thereby increasing the profits they see in selling items to companies and retailers here in the US. It's just a matter of time before they don't need Apple or Microsoft or Boeing to develop the new cutting edge (and most profitable) technology--they will have the resources to do it themselves. And that is when the US will be pushed to the side--to join its European counterparts on the downward slide into secondary economic status.

Maybe it really was a good idea to start teaching our children Mandarin in elementary school.